Concocting ideas to help companies grow

One of my favorite new products is Bay Area Bike Share. If you’ve spent any time along Market Street in San Francisco or around Soma in the last few months, you’ve probably noticed fleets of turquoise bikes around. In total there are 700 bikes and 70 stations across SF, Redwood City, Palo Alto, Mountain View and San Jose. The system aims to offer an “affordable option for quick trips around the city.” The program is funded with $7 million provided by an assortment of government agencies, and operated by Alta Bicycle Share, which runs programs in other cities including New York, Chicago and Boston.

How It Works

The way it works is that you take a bike from one of the stations and you have 30 minutes to drop the bike off at any station. If you’re an annual member, you’ll get a key that releases the bike from the station. Within each city, going station to station shouldn’t take more than 15 minutes maximum, so 30 minutes is plenty of time to get where you’re going. But what if you want to go for a long ride? Generally that’s not the purpose of the bike share, and if that’s what you are looking to do, bike rental places are encouraged instead.

The bikes themselves are sturdy and easy to use. The seats can be raised and lowered easily before you hop on. There are seven different gears to choose from, and a chain guard eliminats the need to do the bikers’ pant roll, making it easy to go to and from work. Be careful with the goods–$1,200 replacement fee.

Pricing

With three separate plans, pricing is simple. You can access the system for 24 hours at $9, 3 days for $22, or for an entire year for only $88—slightly more than the cost of a monthly Muni pass. If you live or work anywhere near the stations, joining for the year is a no brainer. It doesn’t take that many forgone taxi rides for trips that were just too far to walk to justify the cost of an annual membership.

Limitations

The stations are located primarily around key public transportation hubs—Caltrain and BART stations. This helps maximize utility for commuters, one of the primary objectives of the program. In SF, if you don’t spend much time in Soma of the Financial District, the system won’t be that useful. It would be great to see a few stations in the Mission. (Although I think it might be a requirement that you have your own bike to live there.)

Opportunities

At only $88 annually, it’s really hard to complain about the current offering as is, but I see a couple opportunities to increase use at minimal cost. The first is modifying the corporate program to target large buildings, particularly in Soma. Communities like Avalon, the Beacon, Infiniti and the many others in Soma are natural marketing hubs located just steps away from the stations. Tapping these communities with a small discount similar to what is offered to corporations would be a great way to reach people that would get the most value.

Another cool benefit for annual members would be to set up reciprocity programs with other cities also part of Alta’s network. Now I’m assuming that the infrastructure is the same and that it would simply be a matter of giving a fob access to multiple cities. I wouldn’t expect that there would be a ton of cross-city use, but it would be a nice option to encourage pollution free transportation as members travel around the country.

In summary: if you regularly pass by a Bay Area Bike share station, get an annual membership. You’ll find yourself getting some unexpected exercise realize that there are a lot more opportunities to use the system then you might initially think.

I’ve been using OpenTable since 1999 and have cumulatively booked somewhere in north of 600 reservations on the site. It’s a great service that makes booking restaurant reservations easy, convenient and instant. As a registered user of the site, on most reservations you accrue 100 Dining Rewards Points, which are valued at $.01 each and can be redeemed in increments of $20 gift checks that can be used at any OpenTable restaurant. Users who have honored 12 or more reservations as designated as “VIP,” however it’s unclear what, if any, benefits this includes. I have been an OpenTable VIP for years, and I have yet to see a restaurant acknowledge this in any way, or offer me special treatment because of this status. In summary, as the loyalty program currently stands, there isn’t actually anything about the program itself that instills loyalty to the platform.

Stop the 100 Point Rewards

There is an argument to be made that OpenTable should stop offering 100 points per reservation. My instinct is that the $1 incentive has minimal impact on a diner’s decision to book through OpenTable. The platform offers a ton of value to the diner through the ability to book online, read diner reviews and see photos of the food and restaurants—all at no cost. In the movie business Fandango provides an online booking service and charges the customer. Why does OpenTable need to offer a standard 100 points for booking, particularly at this point where it has such a dominant market share? If I want to go to one of my favorite restaurants, I strongly prefer to quickly book a reservation online. I don’t need to be incentivized to do so, as it’s already a big benefit to not have to pick up the phone and get access to real-time availability.

Based on a November 2013 investor presentation, OpenTable seated over 37 million guests in each of the first three quarters of 2013. To make the numbers simple, let’s assume an average of 3.7 guests per reservation (which I’m guessing is actually lower), meaning there were 10 million seated reservations. Now some of these reservations may have been 1,000 point tables or no-point reservations, but it’s seems reasonable to estimate that for each quarter that OpenTable assumes somewhere in the neighborhood $10 million in Dining Rewards Points liability. Quarterly revenues are in the $45-46 million range, meaning that if it cut the standard 100 point offering the bottom line would increase substantially.

Won’t this upset customers? Yes, but probably not anywhere enough to justify the $10 million quarterly savings. Given that 12 annual reservations makes you a VIP, it’s safe to say that most users don’t book that frequently, in which case they are not likely to be too upset about losing out on less than $12/year. The VIPs will certainly be the more vocal among the group as they stand to lose the most, but then again, if they’re eating out that often, even $50 over a year is a small sacrifice for the convenience of online booking.

VIP Benefits

Whenever you have some bad news to deliver, it helps if you can also deliver some good news at the same time. OpenTable could pull this change off and satiate the VIP members by simultaneously enhancing the actual benefits for VIPs. What would power diners value?

Access to choice seatings – could OpenTable get restaurants to hold a few prime time tables that would only be available to VIPs? Why would restaurants do this? Because OpenTable would incentivized them with lower seating fees for these tables. I’m sure a case could also be made that VIP diners have higher average checks, which would make this more attractive to restaurants as well.

Threshold rewards – take a page from the airline programs where there are different tiers of elite customers, and offer some sort of bonus for attaining 25, 50, etc reservations in a calendar year. OpenTable could partner with food and wine brands and potentially get free or deep discounted product for distribution to targeted frequent diners.

Event discounts – there are tons of food and wine related events around the country that are looking for marketing partners. VIP members could opt into receiving access to special discount offers in their area.

Restaurant benefits – allow restaurants to opt in to offering VIPs special treatment, which would appear on the booking page. These could be specials such as a free drink with the order of an entrée, waived corkage, free dessert, and more. It would be at the discretion of the restaurant, but with guidelines from OpenTable. Restaurants can already offer 1,000 point specials of which I’ve seen significant uptake. The same higher average check argument could be made here.

Improved Redemption

The points redemption process could also be improved with a tighter integration with the system. The ideal situation would be one in which you could simply apply any $20 increment towards a bill directly. This could be done all online either through the website or the mobile app before even sitting down. This eliminates the ongoing processing fees for the check, and simultaneously eliminates the problem of having to remember to bring the check with you to dinner. OpenTable already has an accounting relationship with restaurants on a monthly basis, so why not just adjust the monthly balance based on redemptions?

The good news is that the platform itself is dominating—most online restaurant reservations are flowing through OpenTable. There are multiple ways that changes in the Diners Rewards program can ultimately drive more bookings (and profit) for OpenTable.

My wife and I have been trying to cook more—we’ve been saying this now for over a year since my parents got us a beautiful All-Clad set of pots and pans. Inevitably our schedules get in the way and we don’t have time to get groceries (despite the fact that we live across from Safeway) or to plan a menu.

Enter Blue Apron, a weekly service that delivers fresh groceries in the exact quantity you need for the accompanying recipes. Problem solved. For only $9.99 per person per meal, Blue Apron sends a minimum of three meals for two people each week and is available in most areas across the county. Your choices are limited to the number of servings, vegetarian vs meat & fish, and day of delivery, Tuesday-Thursday.

Here are a few thoughts on what might make the service even more attractive:

More Choices

As of now, from a recipe perspective, your choice is binary, vegetarian or meat & fish. I’ll start with some simple tweaks, keeping in mind that what enables the price to stay reasonable is that Blue Apron is able to buy ingredients in scale by limiting the number of dishes per week and the ability to demand forecast to minimize waste. At a minimum, allow three choices among the six options. Sometimes there’s a choice from the meat & fish menu that I know I don’t really like, and I see something on the vegetarian menu that I’d strongly prefer. Alas, it’s one set or the other. An even better scenario would be to have a fourth and fifth option to choose from for each set. This would still allow for scale advantages, while also enabling an “out” for that dish that doesn’t float your boat. If a customer didn’t have time to make selections, it could just default to a consistent set of three.

Blue Apron is set up as a subscription, where you are automatically opted in to weekly delivery. This is smart in that it’s less work for the customer and increases the likelihood of future sales. That said, it’s not very friendly for the one-off use case. For example, through the referral program, I gave my parents a free week of the service. They loved the product, but my mom, who is recently retired, said that she wouldn’t continue with it because she has time to go to the grocery store and actually enjoys the shopping process. That said, she mentioned that on weeks that she knows will be busy, like when they return from a trip out of town, the service would be great. Currently ordering on an ad hoc basis like this requires that you manually opt out of each week and then have to remember to continue doing this as the delivery schedule only goes five weeks out. In short, it would be helpful if you could put your account in a “paused” status that would allow you to opt in when desired.

Lastly, I would like the option to adjust the quantity for specific meals. We like to entertain, and nights that we are having friends over for dinner can’t be Blue Apron nights because we only need enough for two on the other nights. This would potentially contribute to not skipping a week if other activities, like dinner parties, were planned, and it presents an opportunity for an upsell.

Pre-paid Pricing

I noticed that on the gifting page that a 4 week prepaid subscription comes with a small discount to $9.49 per person per meal. Why isn’t something like this offered to regular customers? I could see this being modeled after SaaS based pricing, or even an Audible.com Platinum membership where if you commit to a year of service and pay up front that you get a discount. Of course a “year” of service couldn’t realistically be 52 weeks, but Blue Apron could analyze how frequently their top cohorts of customers are ordering and use that as a proxy for what would be reasonable. Get 20 weeks of 3 meals for two to be used over the course of a year for $999 pre-paid has a nice ring to it. That’s a 16% discount and a guaranteed customer and free working capital.

Engagement Hooks

Blue Apron is doing a great job of engaging its customers. The level of interaction on their Instagram and Facebook accounts is impressive, but there is opportunity for making the site even more sticky. Start by taking a play from OpenTable and Amazon playbook—ask for a rating and review of each recipe as a follow up. Currently you are able to download a PDF of the recipe and leave comments via a Facebook plugin. Why not include the ability to rate a recipe and leave a review that would live on the site where other customers could reply and vote on its usefulness? This could also serve as a guide for what recipes to continue and which ones to retire. If Blue Apron took my recommendation to expand choices, the ratings could be used to recommend which dishes the customer would be most likely to enjoy.

The subscription nature of the product lends itself to regular use by multiple customers per account—couples, roommates, and families. Currently the direct relationship is between Blue Apron and the person who set up the account, but this misses a big opportunity engage with the other half (or more) of their customer base. Of course it’s possible to share the login information, but I propose allowing multiple individual accounts to be associated with one subscription. I typically end up forwarding the menu preview email to my wife. I’m sure she’d feel more connected to the brand if she were also getting included on relevant communications, and even her own set of referral free meal offers. This also ties back to more engagement with respect to ratings and reviews.

Partnerships

Clearly anyone that has subscribed enjoys cooking. The recipes are accessible to the beginner to intermediate cook as they are generally not very complex and designed for relatively fast preparation. There is an opportunity to partner with some established players, like Williams Sonoma, to produce and co-market Blue Apron branded cooking classes. Something like this could easily be piloted in New York or San Francisco and has the potential to be a great community builder. It could even be positioned as an invite-only benefit for top customers.

As of this writing, we’ve ordered seven times and have really enjoyed it. The large majority of the dishes have been very good, and the misses were more related to our personal taste preferences. Overall, I recommend trying it out.

Every city has restaurants where it’s almost impossible to book a reservation for less than two months in advance, or if you’re luck at 5:30pm or after 10:00pm. In San Francisco, that includes restaurants like flour + water, Frances and State Bird Provisions. There’s always the option of slogging it out, showing up, and waiting for a bar table or to actually get regular table, but that typically involves a minimum of an hour or more of wait time.

There is now an easier way and it’s called Rezhound, a weekend hack project by Reed Kavner (@reedkavner) in San Francisco. When you visit the site, it detects your IP address and automatically sets your region, and to start you enter the restaurant you want to book. You select a date, time and number of guests and finally whether your time is flexible, in which case it will search within two hours of your stated time. Then Rezhound does the rest of the work, regularly checking via OpenTable if that reservation is available, and notifying you by email when your table is available. Sorry OpenTable restaurants only.

While I tip my hat to Reed for pulling together this service in his spare time, I wonder why OpenTable has not developed this feature itself. This feels like it could be a natural addition to the reservation flow. When your initial request comes up empty, OT will spit out next available dates and times where same party size reservations are open. I could imagine a prompt at this point to get an email notification when availability opens up. You could select multiple dates you are interested in and OT would send you an email notification when a table meeting your criteria comes available. You would still have to proactively book your reservation on OT at this point, but if you were to reply immediately, you’re in. I could see an interface similar to Kayak where you could manage all your reservation alerts.

This could be a win for all parties involved. Guests can dine when and where they want. OpenTable will drive return traffic to the website and secure additional bookings. Now the restaurant would probably fill the table either way, but what it could also capture, with help from OpenTable, is effectively a wait list and valuable demand data for reservations on various nights of the week. But perhaps I’m missing possible downsides here? OpenTable has been at it for over a decade and they haven’t implemented this feature. That said, I’d love to see up and running.

Like many other diners, when I’m looking to book a reservation, OpenTable is usually my first stop. It doesn’t get more convenient than booking directly online, and OpenTable has broad coverage of restaurants among those accepting online reservations. The site already has all my profile information saved so I don’t have to repeat my contact info during the process.

Where the process goes awry is a day or two before your resie and you get a call from an unrecognized number, which you send to voicemail and turns out to be the restaurant calling to confirm the reservation. Even worse yet, the host leaves a voicemail message with some number that’s different than the one they called on, so an additional step of jotting down the number has been added. Now it’s just good business for restaurants to do this since a ditched reservation can potentially mean an unutilized table and therefore money lost.

This is where OpenTable needs to intervene. After all, I booked my reservation online, so why not also confirm online through the system? A simple auto-email set for a certain number of hours prior to the reservation that could be set by the restaurant could be generated. Click a link to confirm and you’re done. Or they could also go the text message route, which Complete Seating does. (I’ve used this feature for AQ Restaurant in SF, and it works like a charm.)

There are benefits all around to this approach. On the restaurant side, it saves hours of phone calls to guests, freeing up the host to attend to other things. From the guest perspective, it streamlines the process, and it’s much less intrusive. I’d wager that restaurants would get a higher response rate as compared to phone calls and voicemails. Everyone wins—even OpenTable, which could redirect guests to the site after clicking the link to confirm.

Stubhub is the leading secondary ticket marketplace in the US. The amount of ticket volume that it moves is incredible, and with a small tweak it could process even more highly profitable transactions. Stubhub takes 15% commission from the seller and charges at 10% buyers fee, plus on electronic tickets, it charges ~$5 per transaction for delivery. While this is a healthy margin, it’s only fair to point out that when you add in 3% for credit card processing fees, a new 2-3% rebate for their Stubhub Fan Rewards loyalty program, and large seller discounts of up to 5%, the gross margins aren’t as high as they’d initially seem. When etickets are uploaded by the seller for instant download, or the tickets have been dropped off at a Last Minute Tickets location, the listings (as of recently) stay up until the event start time. Previously etickets would have a cutoff time of two hours prior to the event, presumably for Stubhub to service customers who have run into issues before the start of the event.

I have watched many event pages over the two hours leading up to the start time, and I can confirm first-hand that a large number of sales are processed during this time. So while there may be a tradeoff of a small handful of customer issues that arise, there is a huge upside from all the additional transactions that occur in the last couple hours.

I propose that Stubhub continues to keep listings up after the event start time. There are often a fair amount of tickets remaining at the start of the event, and my hypothesis is that many of these tickets ultimately go unused. I understand that Stubhub promises that tickets will be delivered prior to the start of the event, and this makes sense in the context of buying tickets in advance. However, anyone who purchases tickets after the start time could be presented with a popup warning that the event has already started and will not be able to proceed without clicking a button to confirm. It has a similar process in place for listing tickets now that the end time of the listing goes until the start time. It’s hard to quantify how much this would be worth to Stubhub, but I think it would see a similar amount of activity in the 30 minutes after the start as it would over the last 15 minutes prior. This adds up across the thousands of events that they have listed.

The extended listing makes even more sense in the context of concerts, where frequently the main act doesn’t come on for a good 60-90 minutes after the opening act begins performing at the start time. In these instances I could see a lot more activity. The exception would be cases like MLB where Stubhub is the official secondary marketplace for the league and the teams are able to dictate the end time. This past season, only a few teams like the Giants chose to list up until game time, while others chose to cut off sales, trying to protect walkup sales.

One additional tweak that Stubhub could make to facilitate and encourage last minute mobile purchases is to help buyers overcome the significant impediment of printing electronic tickets. Most last minute buyers are in the vicinity of a venue are not near home or an office where they can print tickets. In the context of MLB or other direct partners, this could involve either including a will call option with the team or an integration with iPhone’s Passbook or the Android equivalent. It gets a little more complex when regular printing is involved, but I could see rolling out a partnership with locations nearby big event venues where buyers could easily send tickets to be printed via an app or mobile browser.

The beauty of both these product enhancements is that they both could be tested fairly easily in a contained environment with a limited number of venues where they could be monitored closely. If the tests show an uptick in sales, Stubhub would continue with the rollout. If they don’t move the needle, it could simply shut the projects down with minimal investment. The potential upside greatly outweighs the costs.

This ski season I’m using the Mountain Collective pass, which gets me to days of skiing at four great resorts, 50% off lift tickets thereafter and lodging discounts. Eight ski days for only $349—awesome. The beauty of this pass is that it includes a diverse selection of resorts under different ownership including Aspen/Snowmass, Jackson Hole, Alta and Alpine/Squaw Valley. For people like me who don’t like to commit to a pass limiting you to just one resort, this is the perfect pass. Redemption of the pass is fairly straight forward in that you bring in a printed ticket to the ski area ticket office where you are issued a lift ticket.

With the precedent for this type of cross-resort pass, I see an opportunity for a similar type of pass, only driven by the Starwood hotel chain, which has several resort properties in ski areas across North America. In particular potential resorts include: Whistler, Steamboat, Vail, Aspen, Deer Valley, and Mammoth. While this may be less attractive to Aspen and Vail in that it’s competitive with the Mountain Collective and Vail’s Epic Pass, it still opens up a huge marketing opportunity for the resorts in that it would access SPG’s huge national customer base. The revenue split to the pass itself could be modeled after the Mountain Collective pass.

So what’s in it for Starwood? Hotel bookings. There are typically a ton of options when it comes to ski lodging from independent rentals by owners to hotels. A pass with an SPG lodging discount and perhaps some add-ons such as a free breakfast or a spa credit could lure skiers to resorts where Starwood is present.

Now imagine bringing in another existing SPG marketing partner, American Express, which offers an SPG credit card. The partnership would give Amex an opportunity to market the SPG card to pass holders and would further extend the marketing reach for the pass.

The structure for an offering like this is in place. Many of the hotels already offer packages including lift tickets, so it then becomes a matter of taking the relationships to the next level.